Creating a Premier Midwest
Community Bank
David T. Provost
Chief Executive Officer
Thomas C. Shafer
Vice Chairman, Chief Executive
Officer of Chemical Bank
August 9, 2017
Sandler O’Neill Investor Presentation
Chicago, IL
This presentation and the accompanying presentation by management may contain forward-looking statements that are based on management's beliefs,
assumptions, current expectations, estimates and projections about the financial services industry, the economy and Chemical Financial Corporation ("Chemical").
Words and phrases such as "anticipates," "believes," "continue," "estimates," "expects," "forecasts," "future," “go forward,” "intends," "is likely," "judgment," "look
ahead," "look forward," "on schedule," “on track,” "opinion," "opportunity," "plans," "potential," "predicts," "probable," "projects," "should," "strategic," "trend," "will," and
variations of such words and phrases or similar expressions are intended to identify such forward-looking statements. Such statements are based upon current beliefs
and expectations and involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-
looking statements. These statements include, among others, statements related to loan pipeline, future levels of loan charge-offs, future levels of provisions for loan
losses, real estate valuation, future levels of nonperforming assets, the rate of asset dispositions, future capital levels, future dividends, future growth and funding
sources, future liquidity levels, future profitability levels, future deposit insurance premiums, future asset levels, the effects on earnings of future changes in interest
rates, the future level of other revenue sources, future economic trends and conditions, future initiatives to expand Chemical’s market share, expected performance
and cash flows from acquired loans, future effects of new or changed accounting standards, future opportunities for acquisitions, opportunities to increase top line
revenues, Chemical’s ability to grow its core franchise, future cost savings, Chemical’s ability to maintain adequate liquidity and capital based on the requirements
adopted by the Basel Committee on Banking Supervision and U.S. regulators and future changes in laws and regulations applicable to Chemical and the financial
services industry in general. All statements referencing future time periods are forward-looking.
Management's determination of the provision and allowance for loan losses; the carrying value of acquired loans, goodwill and mortgage servicing rights; the fair value
of investment securities (including whether any impairment on any investment security is temporary or other-than-temporary and the amount of any impairment); and
management's assumptions concerning pension and other postretirement benefit plans involve judgments that are inherently forward-looking. There can be no
assurance that future loan losses will be limited to the amounts estimated. All of the information concerning interest rate sensitivity is forward-looking. The future effect
of changes in the financial and credit markets and the national and regional economies on the banking industry, generally, and on Chemical, specifically, are also
inherently uncertain. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("risk factors") that are
difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from what may be
expressed or forecasted in such forward-looking statements. Chemical undertakes no obligation to update, amend or clarify forward-looking statements, whether as a
result of new information, future events or otherwise.
In addition, risk factors include, but are not limited to, the risk factors described in Item 1A of Chemical’s Annual Report on Form 10-K for the year ended
December 31, 2016. These and other factors are representative of the risk factors that may emerge and could cause a difference between an ultimate actual outcome
and a preceding forward-looking statement.
Non-GAAP Financial Measures
This presentation and the accompanying presentation by management contain certain non-GAAP financial disclosures that are not in accordance with U.S. generally
accepted accounting principles ("GAAP"). Such non-GAAP financial measures include Chemical’s tangible equity to tangible assets ratio, tangible book value per
share, presentation of net interest income and net interest margin on a fully taxable equivalent basis, and information presented excluding significant items, including
net income, diluted earnings per share, return on average assets, return on average shareholders’ equity, return on average tangible common equity, operating
expenses and efficiency ratio. Chemical uses non-GAAP financial measures to provide meaningful, supplemental information regarding its operational results and to
enhance investors’ overall understanding of Chemical’s financial performance. The limitations associated with non-GAAP financial measures include the risk that
persons might disagree as to the appropriateness of items comprising these measures and that different companies might calculate these measures differently. These
disclosures should not be considered an alternative to Chemical’s GAAP results. See the Supplemental Information included with this presentation for a reconciliation
of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
Forward-Looking Statements & Other
Information
2
Emphasize our strategy of
being the Preeminent Midwest
Community Bank
4
1
Demonstrated track record of
organic growth2
High performing pro forma
profitability should drive upside3
Realizing our ever greater potential
The largest banking company headquartered in Michigan
Scalable core strategies and disciplines
Proven organic growth initiatives
Leadership in EPS growth among peers (1)
Total Return out-performance (peers and indices) (1)
Pro Forma 1.2%+ ROAA, ROAE 8%, ROATCE(2) approaching 15%, low efficiency ratio
Delivering on projected merger benefits
Consistent EPS growth performance
Market share growth
Revenue enhancements
Concentrate on achieving cost savings and exploiting business synergy opportunities
Continue to build out and enhance risk management practices
(1) Source: SNL Geographic Intelligence
(2) ROATCE, excluding significant items, is a non-GAAP financial measure. Significant items include transaction expenses and loan servicing rights change in fair value.
Please refer to slides 30 - 33 for a reconciliation of non-GAAP financial measures.
Overview
3
“Local” community bank
Strong belief in the community banking concept
23 identified centers of influence
Community-driven leadership, rapid local response
Emphasis on building relationships
We know our markets, what works, and what does not work
Strong credit culture
Diversification
In-depth knowledge of our customers and markets
Underwriting discipline
Low cost, stable, core funding – starts at relationship level
Expense management and control
Clean balance sheet, solid capital ratios and intense focus on effective capital deployment
Identify, hire, motivate and retain talented individuals to carry out our relationship strategies
Sustain long-term growth through combination of organic and acquisitive growth
Higher lending limits provide enhanced middle market lending growth opportunities
Opportunities for fee income growth from Wealth Management and Mortgage Banking synergies
Enhancing preparedness for future acquisitive growth opportunities in Michigan, Ohio, and Indiana
Scalable Core Strategies & Disciplines
Core Values
4
5
Breakdown of CHFC’s Loan Growth
Source: Company Documents, SNL Financial
* Annualized organic loan growth
$1,041
$1,583
$5,720
g g ( )
’12 -’16 Year Loan Growth CAGR: 103%
’12 – ’16 Organic Loan Growth CAGR: 42%
Av . Annual Or anic Growth ’12-’16 : 10.2%
Loans @ Year
End ($B) $4.2 $4.6 $5.7 $7.3 $13.0
Improving Organic Loan Growth
$13.3
*
$293
$480 $566 $475
$838
$283 $394
$44
$475
$1,108
$4,882
7.6%
11.5%
12.2%
8.4%
11.5%
8.7%
11.9%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
$0
$500
$1,000
$1,500
$2,000
$2,500
2012 2013 2014 2015 2016 1Q'17 2Q'17
Annual
Organic
Loan
Gr
o
w
th
(
%
)
$
i
n
M
i
l
l
i
o
n
s
Organic Acquired Annual Organic Loan Growth
$13.7
$6,000
*
6
EPS Growth Translates to Outsized Shareholder Return
Source: CHFC data per Company Documents, Peer data per SNL Financial; Market data as of 8/3/2017
(1) Diluted EPS, excluding significant items, is a non-GAAP financial measure. Peer Income excludes extraordinary items, non-recurring items and gains/losses on sale of securities. Please refer to
slides 30 – 33 for a reconciliation of non-GAAP financial measures for CHFC calculations.
(2) Peers include nationwide banks with $10 to $25 billion in total assets
(3) Includes cash dividends paid to common shares
Diluted EPS, excluding significant items,
Growth(1)
Total Shareholder Return (%)(3)
(2)
160.1%
(15%)
30%
75%
120%
165%
210%
Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16
Peer Median (140.1%) CHFC (160.1%)
140.1%
E
P
S
(
$
)
D
iluted E
P
S
, excluding significant item
s, Y
oY
G
row
th (%
)
T
o
t
a
l
S
h
a
r
e
h
o
l
d
e
r
R
e
t
u
r
n
(
%
)
(2)
CHFC ’12-’16 Diluted EPS CAGR:
11.0%
(1)
(1)
’12-Aug’17 Total Return CAGR:
CHFC: 17.9%
Peers: 14.9%
$18.8 billion in assets
Largest banking company headquartered and
operating branches in Michigan
Operates 249 banking offices primarily in Michigan,
Northeast Ohio and Northern Indiana
Local market knowledge and business development
opportunities led by 23 community-based advisory
boards
One of the largest trust and wealth management
operations of a Michigan-headquartered bank with
$4.7 billion in assets under management or custody
and another $1.4 billion in assets within the Chemical
Financial Advisors Program
Focused on realizing operating and business synergies
from Chemical / Talmer merger and enhancing
preparedness for future organic and acquisitive growth
$3.4 billion Market Capitalization(1)
(1) Based upon CHFC shares outstanding of 71.1 million and the CHFC stock price of $47.45 on August 2, 2017.
7
About Chemical Financial Corporation
8
ROAA(3)(%)
CHFC’s Performance Metrics
Source: SNL Financial and Company Documents; CHFC GAAP from SNL Financial
(1) CHFC Income excludes transaction expenses, loan servicing rights changes in fair value and gains on sales of branches. Peer income excludes extraordinary items, non-recurring items and
gains/losses on sale of securities. Please refer to slides 30 - 33 for a reconciliation of non-GAAP financial measures.
(2) Peers include nationwide banks with $10 to $25 billion in total assets; ratios are presented on an “adjusted” basis, see footnote 1
(3) ROAA, ROATCE and the efficiency ratio, excluding significant items, are non-GAAP financial measures. Please refer to slides 30 – 33 for a reconciliation of non-GAAP financial measures.
ROATCE(3)(%)
Efficiency Ratio, non-GAAP(3)(%)
(2) (2)
(2)
Dividends per Share ($)
(1) (1)
0.9% 1.0%
1.0%
1.0%
0.9%
1.1%
0.9% 0.9%
1.0%
1.1%
1.2%
1.2%
0.9%
1.1% 1.1% 1.1%
1.1%
1.0%
0.7%
0.8%
0.9%
1.0%
1.1%
1.2%
1.3%
2012 2013 2014 2015 2016 1H'17 Ann.
CHFC, GAAP CHFC, adjusted Peer Median
62.7%
64.2%
65.3%
63.2%
67.2%
62.0%
60.8%
63.1%
61.6%
58.7%
54.4%
57.4%
59.5%
63.0%
61.2%
59.4%
57.5%
58.6%
50.0%
53.0%
56.0%
59.0%
62.0%
65.0%
68.0%
2012 2013 2014 2015 2016 1H'17 Ann.
CHFC, GAAP CHFC, adjusted Peer Median
$0.82
$0.87
$0.94
$1.00
$1.06 $1.08
$0.70
$0.80
$0.90
$1.00
$1.10
2012 2013 2014 2015 2016 1H'17 Ann.
11.2%
11.7%
10.3%
13.8%
12.2%
14.0%
11.2%
11.4% 11.2%
13.7% 13.6%
14.6%
10.9%
11.8% 11.5% 11.5% 11.4%
11.4%
8.00%
10.00%
12.00%
14.00%
16.00%
2012 2013 2014 2015 2016 1H'17 Ann.
CHFC CHFC, adjusted Peer Median
(1)
9
Delivering on Projected Merger Benefits
Source: Company Documents
(1) Taken from presentation dated 2/1/2016; presentation filed with the SEC and was utilized by CHFC’s Senior Mgmt. team during analyst / institutional investor meetings to discuss the merger. CHFC
12/31/15 figures have been adjusted to reflect the current non-GAAP methodology utilized; the variance between the non-GAAP calculations are immaterial.
(2) Includes nationwide banks with total assets between $10 and $25 billion
(3) ROAA, ROATCE and Efficiency Ratio, excluding significant items, and TCE/TA and P/TBV are non-GAAP financial measures. Refer to pages 30 – 33 for reconciliations of non-GAAP financial measures.
(4) Market data as of 1/29/2016
(5) Market Data as of 8/2/2017
(6) EPS estimates in the 12/31/2015 CHFC column were consensus “Street” estimates just prior to announcement of the merger; estimates in the Pro Forma CHFC / TLMR column were the pro forma
estimates provided by CHFC; estimates in the Today column are the current consensus “Street” estimates per Bloomberg
(7) Difference between Peer Median and Top Quartile multiples and CHFC Today, divided by CHFC Today. This is forward-looking, provided for information purposes only and not a guarantee of
performance.
CHFC is Largest MI‐Headquartered Banking Company
CHFC Operating Markets
Source: SNL Financial. Deposit data as of 6/30/2016.
Note: CHFC’s two branches in Northern Indiana are excluded from the Southwest Michigan region.
(1) Local is defined as banks headquartered in Michigan
Northern Michigan Southeast Michigan
Southwest Michigan
Central Michigan
Northern Ohio
Deposit
Market
Share Rank
Number of
Branches
Deposits in
Market
($000)
Market
Share
(%)
Central Michigan 1 62 2,945,718 19.8%
Northern Michigan 1 58 2,104,274 17.5%
Southwest Michigan 3 78 3,247,458 8.9%
Southeast Michigan 9 30 2,983,852 2.3%
Northern Ohio 13 26 1,223,393 1.2%
The Preeminent Midwest Community Bank
10
Rank
"Local"
Rank (1) Institution (ST) Branches
Deposits
($mm)
Market
Share
(%)
1 JPMorgan Chase & Co. (NY) 241 42,007 21.0%
2 Comerica Inc. (TX) 204 26,964 13.5%
3 PNC Financial Services Group (PA) 192 17,326 8.7%
4 Bank of America Corp. (NC) 120 16,564 8.3%
5 Fifth Third Bancorp (OH) 211 16,073 8.0%
6 Huntington Bancshares Inc. (OH) 332 15,212 7.6%
7 1 Chemical Financial Corp. (MI) 228 11,281 5.6%
8 2 Flagstar Bancorp Inc. (MI) 99 8,773 4.4%
9 Citizens Financial Group Inc. (RI) 95 5,138 2.6%
10 TCF Financial Corp. (MN) 52 2,908 1.5%
11 Wells Fargo & Co. (CA) 18 2,812 1.4%
12 3 Mercantile Bank Corp. (MI) 48 2,282 1.1%
13 4 Independent Bank Corp. (MI) 64 2,152 1.1%
14 5 Macatawa Bank Corp. (MI) 30 1,360 0.7%
15 KeyCorp (OH) 23 1,334 0.7%
Totals (1‐123) 2,632 200,386 100.0%
Overlapping Michigan Markets New Michigan & Ohio MarketsOther Markets
Southwest MI Central MI Southeast MI Northern OHNorthern MI
(1) Source: USDOC’s Bureau of Economic Analysis. Considered the largest Metropolitan Statistical Area for each region. The Northern Michigan region does not have a Metropolitan Statistical Area as defined by
the Bureau of Economic Analysis
(2) State Deposits are in billions per SNL Financial and as of 6/30/16
(3) Source: SNL Geographic Intelligence
CHFC: Deposits / Rank $3.2 #3 CHFC: Deposits / Rank $2.9 #1 CHFC: Deposits / Rank $2.1 #1 CHFC: Deposits / Rank $3.0 #9 CHFC: Deposits / Rank $1.2 #13
All Major MI Markets & OH Growth Opportunity
96% of businesses / 96% of population is within MI footprint(3)
Southeast Michigan represents more than 50% of Michigan GDP – a huge opportunity with recent market disruption
CHFC Footprint By State & Regional Market
MI OH
Southwest
MI
Central
MI
Northern
MI
Southeast
MI
Northern
OH
Michigan
Penetration
TotalDeposits ($B) $11.3 $1.2 $3.2 $2.9 $2.1 $3.0 $1.2
Market Share Rank 7 23 3 1 1 9 13
Deposit Market Share (%) 5.6% 0.4% 8.9% 19.8% 17.5% 2.3% 1.2%
Market Information (as a % of):
% of State ($B) GDP (1) 12% 2% ‐ 53% 22%
% of State Deposits (2) 18% 7% 6% 66% 33% 97%
% of State Businesses (3) 25% 13% 11% 47% 39% 96%
% of State Population (3) 25% 13% 9% 49% 37% 96%
11
Increase in in-house lending limit creates opportunity in middle-market space
5 active lenders
Recruiting efforts: hired West Michigan relationship manager in May 2017; 1
additional lender in Southeast Michigan (4Q2017)
Opportunity (Companies $50 - $500 million in sales revenue):
West Michigan – 150 companies; present penetration <15
Southeast Michigan – 400 companies; present penetration <10
Ohio – 250 companies; present penetration <10
Portfolio Projections: $350 million at year-end 2017
Realizing our ever greater potential
12
July 2017
Southeast
Michigan Ohio
West
Michigan Chicago Total
Loans (#) 7 9 5 9 30
Loans ($) $45 million $111 million $34 million $113 $303 million
Pipeline (#) 8 7 6 2 23
Pipeline ($) $137 million $125 million $35 million $25 million $322 million
Build out of mortgage processing platform
October conversion to enterprise-wide operating / underwriting system
Hired 30 mortgage loan officers, 4 producing sales managers and 1 non-producing sales
manager
Anticipate hiring 20 – 25 additional MLO’s in 2017
Opportunity & Focus: Grand Rapids / Holland, Northern Indiana and Cleveland
Michigan Market Penetration:
4Q2016 (average): 2.05%
1Q2017 (average): 2.47%
Origination Volume:
4Q2016: $490.5 million – 60% purchase / 40% refinance; 54% sale / 46% portfolio
1Q 2017: $313.3 million – 65% purchase / 35% refinance; 46% sale / 54% portfolio
2Q 2017: $463.2 million – 76% purchase / 24% refinance; 45% sale / 55% portfolio
YTD 2017: $945.2 million – 72% purchase / 28% refinance; 45% sale / 55% portfolio
Realizing our ever greater potential
13
Opportunity, Enhancement, Growth (October 2016 through July 2017)
Emphasize our strategy of being the Premier Midwest Community Bank
Focus on what will build shareholder value
• Organic revenue growth and cost discipline
• Concentrate on achieving cost savings
• Expand our market presence and product lines where additional value
can be created
• Rationalization of branch locations
Closing Comments
14
Supplemental Information
David T. Provost
Chief Executive Officer
Thomas C. Shafer
Vice Chairman, Chief Executive
Office of Chemical Bank
Q2 2017 Highlights
Diluted earnings per share of $0.73, compared to $0.67 in both the 1st qtr. 2017 and the 2nd qtr. 2016
Diluted earnings per share, excluding significant items(1) of $0.75; up 6% from 1st qtr. 2017, and up 4%
from 2nd qtr. 2016(2)
Return on average assets and return on average shareholders' equity of 1.14% and 8.0%, respectively, in
2nd qtr. 2017 (1.17% and 8.2%, respectively, excluding significant items(1)(2))
Loan Growth
▪ $394 million in 2nd qtr. 2017 (quarterly organic loan growth 3.3% commercial, 4.8% commercial
real estate and 3.3% consumer loans)
Asset quality ratios
▪ Nonperforming loans/total loans of 0.37% at June 30, 2017; up slightly from 0.36% at March 31,
2017, and down from 0.58% at June 30, 2016
▪ Net loan charge-offs/average loans of 0.04%
(1)Significant items include transaction expenses and the change in fair value in loan servicing rights.
(2)Denotes a non-GAAP financial measure. Refer to the Appendix for a reconciliation of non-GAAP financial measures. 16
2017 2017 2016
(in thousands except per share data) 2nd Qtr. 1st Qtr. 2nd Qtr.
Net interest income $ 137,948 $ 130,097 $ 77,495
Provision for loan losses 6,229 4,050 3,000
Noninterest income 41,568 38,010 20,897
Operating expenses 98,237 104,196 59,085
Operating expenses, excl. transaction expenses(1) 97,772 100,029 56,031
Transaction expenses 465 4,167 3,054
Net income 52,014 47,604 25,775
Net Income, excl. significant items(1) 53,488 50,650 27,760
Diluted EPS 0.73 0.67 0.67
Diluted EPS, excl. significant items(1) 0.75 0.71 0.72
Return on Avg. Assets 1.14% 1.09% 1.10%
Return on Avg. Shareholders’ Equity 8.0% 7.4% 10.0%
Efficiency Ratio 54.7% 62.0% 60.1%
Efficiency Ratio - Adjusted(1) 52.2% 57.4% 54.6%
Equity/Total Assets 14.1% 14.7% 11.0%
Tangible Equity/Tangible Assets(1) 8.4% 8.8% 8.2%
Book Value/Share $ 37.11 $ 36.56 $ 27.45
Tangible Book Value/Share(1) $ 20.89 $ 20.32 $ 19.68
Prior Quarter Comparison
▪ Higher net interest income due to one
additional day in Q2 compared to Q1,
organic loan growth, higher loan interest
accretion and higher average balance of
investment securities−partially offset by
higher average short-term borrowings
▪ Higher noninterest income due to higher
wealth management revenue
▪ Operating expenses reflect decreases in
salaries, wages and employee benefits and
transaction expenses
▪ Increase in provision for loan losses
Prior-Year Quarter Comparison
▪ Impact of merger
▪ Significant increase in net interest income,
attributable to Talmer merger and $1.1
billion, or 14.9%, organic growth in total
loans during the twelve months ended
June 30, 2017
(1)Denotes a non-GAAP financial measure. Refer to the Appendix for a reconciliation of non-GAAP financial measures.
Financial Highlights
Income Statement Highlights
17
Financial Highlightsi a cial Highlights
2015 Total: $86.8(1); $92.3(2)(3) 2016 Total: $108.0(1); $140.4(2)(3) 2017
(1)Net Income
(2)Net Income, excluding significant items.
(3)Denotes a non-GAAP financial measure. Please refer to the Appendix for a reconciliation of non-GAAP financial measures.
$53.5(2)(3)
Net Income Trending Upward ($ Millions, except EPS data)
Net Income
$0.57(3)
Net Income Trending Upward ($ Millions, except EPS data)
2015 2016 2017
$50.7(2)(3)
18
$27.8(2)(3)
Significant items (after-tax)
Net Income
__ Diluted EPS, excluding significant items (non-GAAP) (3)
$0.75(3)
Loan Portfolio Composition ($ Millions)
Talmer Merger
Aug. 31, 2016
$1,138 $4,882
$6,020
Total Loan Growth,
Excluding Talmer Merger,
Twelve Months Ended
June 30, 2017
19
June 30, 2016 $7,647 Total Loan Growth Twelve Months Ended June 30, 2017 June 30, 2017 $13,667
Growth - Twelve Months Ended June 30, 2017
Commercial CRE/C&D Residential Consumer
Commercial
CRE/C&D
Residential
Consumer
2015 - $476 2016 - $837 2017 - $677
$15
$224
$181
$280
$56
$677 $837
$96
$186
Quarterly Loan Growth Trends
Loan Growth* ($ Millions)
$275
*Excludes the impact of the $4.88 billion of loans acquired in the Talmer merger.
$283
20
Commercial
CRE/C&D
Residential
Consumer
Quarterly Loan Growth Trends
Loan Growth - 2016 Total* Loan Growth - 2017 Q1 & Q2
$394
Q2 2017 Q1 2017 2016 Total*
Originated Loan Portfolio
Commercial $ 195 $ 88 $ 380
CRE/C&D 313 239 594
Residential 89 119 258
Consumer 103 56 418
Total Originated Loan Portfolio Growth $ 700 $ 502 $ 1,650
Acquired Loan Portfolio
Commercial $ (88) $ (52) $ (292)
CRE/C&D (94) (64) (317)
Residential (97) (72) (133)
Consumer (27) (31) (71)
Total Acquired Loan Portfolio Run-off $ (306) $ (219) $ (813)
Total Loan Portfolio
Commercial $ 107 $ 36 $ 88
CRE/C&D 219 175 277
Residential (8) 47 125
Consumer 76 25 347
Total Loan Portfolio Growth $ 394 $ 283 $ 837
Loan Growth (Run-off) ($ Millions)
Loan Growth* – Originated v. Acquired
*Excludes the impact of the $4.88 billion of loans acquired in the Talmer merger. 21
Loan Growth (Run-off) ($ Millions)
(1)Comprised of $898 million of growth in customer deposits offset by a $453 million decrease in brokered deposits.
(2)Cost of deposits based on period averages.
Total Deposits – June 30, 2016
$7.46
Total Deposits – June 30, 2017
$13.20
Organic
$0.4, 6.0%(1)
Talmer Merger
$5.3
Total Deposits ($ Billions)
Deposit Composition
(2)
2016 2017
22
Total Deposits ($ Billions)
Average Deposits ($ Millions) & Cost of Deposits(2) (%)
Noninterest-bearing Demand Deposits Interest-bearing Demand Deposits Savings Deposits Time Deposits Brokered Deposits
$(0.5)
$(0.1)
Average Cost of Funds Q2 2017 – 0.44% Average Cost of Funds Q1 2017 – 0.35%
$14.9 billion $16.0 billion
Average cost of wholesale
borrowings – 1.07%
Average cost of wholesale
borrowings – 1.06%
Funding Breakdown ($ Billions)
23
March 31, 2017 June 30, 2017
Deposits:
Time Deposits
Customer Repurchase
Agreements
Wholesale borrowings (at
June 30, 2017: brokered
deposits - $0.1 billion, short
and long term borrowings -
$2.5 billion)
Interest and
noninterest-
bearing, demand,
savings, money
market
ALL
NPLs
2015 2016 2017
Originated Loans ($ billions) $3.3 $3.8 $4.3 $5.0 $5.8 $7.5 $8.7
Acquired Loans ($ billions) 0.5 0.4 0.3 0.7 1.5 5.5 5.0
Total Loans ($ billions) $3.8 $4.2 $4.6 $5.7 $7.3 $13.0 $13.7
ALL $88 $84 $79 $76 $73 $78 $84
ALL/ Originated Loans 2.60% 2.22% 1.81% 1.51% 1.26% 1.05% 0.97%
NPLs/ Total Loans 2.05% 1.71% 1.33% 0.89% 0.86% 0.34% 0.37%
Credit Mark as a % of Unpaid
Principal on Acquired Loans 6.6% 6.0% 7.8% 5.4% 4.4% 3.1% 2.6%
Provision for Loan Losses vs. Net Loan Losses
Credit Quality ($ Millions, unless otherwise noted)
Provision for Loan Losses vs. Net Loan Losses
Nonperforming Loans (NPLs) and Allowance for Loan Losses (ALL)
Net Interest Margin(1) and Loan Yields
Net Interest Margin(1)
Purchase Accounting Accretion on Loans
Loan Yields
Net Interest Income
(Quarterly Trend)
Net Interest Income, Net Interest Margin
and Loan Yields
(1)Computed on a fully taxable equivalent basis (non-GAAP) using a federal income tax rate of 35%. Please refer to the Appendix for a
reconciliation of non-GAAP financial measures.
25
Quarterly Tre
2016 2017
2016 2017
$19.4
$41.6*
Quarterly
Non-Interest Income
* Significant items: $1.8 million detriment due to change in fair value in loan servicing rights in Q2 2017 and a detriment
of$0.5 million change in fair value in loan servicing rights in Q1 2017. Q4 2016 included a $6.3 million benefit due to
change in fair value of loan servicing rights and a 7.4 million gain on sales of branch offices.
$38.0*
$20.9
$27.8
26
Quarterly
2016 2017
$54.3*
$56.0(1)
$59.1
$56.3(1)
$58.9
$68.6(1)
$106.1
Quarterly
Operating Expenses
$104.2
$96.3(1)
27
Quarterly
2016 2017
$114.3
$100.0(1) $97.7(1)
$98.2
(1) Denotes a non-GAAP financial measure. Refer to the Appendix for a reconciliation of non-GAAP financial measures.
Peer Average
12/31/2016(1)
CHFC
12/31/2016
CHFC
3/31/2017
CHFC
6/30/2017
Tangible Book Value / Share(2) NA $20.20 $20.32 $20.89
Tangible Common Equity / Tangible Assets(2) 8.1% 8.8% 8.8% 8.4%
Tier 1 Capital(3) 10.8% 10.7% 10.6% 10.4%
Total Risk-Based Capital(3) 12.6% 11.5% 11.4% 11.1%
Capital
(1)Source SNL Financial – ASB, WTFC, CBSH, TCB, UMBF, PVTB, MBFI, ONB, FMBI and FFBC (ordered by asset size).
(2)Denotes a non-GAAP financial measure. Refer to the Appendix for a reconciliation of non-GAAP financial measures.
(3)Estimated at June 30, 2017 28
Tangible Book Value and Capital Ratios
Tangible Book Value per Share(2) (TBV) Roll Forward
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
$
P
e
r
S
h
a
r
e
Performance & Expectations Analyst Consensus
Consistent growth and performance for shareholders through economic cycles
Merger creates the opportunity to strengthen the foundation for delivering
sustainable, strong EPS growth into the future
Consensus EPS Consensus Dividend
SNL Core EPS Common Dividend
29
Consistent EPS Growth Performance
Source: SNL Financial; analyst consensus estimates as of 8/1/2017
Full Year
Q2 2017 Q1 2017 Q2 2016 2016 2015
Shareholders’ equity $ 2,639,442 $ 2,600,051 $ 1,050,299
Goodwill, CDI and non-compete agreements, net of tax (1,153,595) (1,154,915) (297,044)
Tangible shareholders’ equity $ 1,485,847 $ 1,445,136 $ 753,255
Common shares outstanding 71,131 71,118 38,267
Tangible book value per share $ 20.89 $ 20.32 $ 19.68
Total assets $ 18,781,405 $ 17,636,973 $ 9,514,172
Goodwill, CDI and non-compete agreements, net of tax (1,153,595) (1,154,915) (297,044)
Tangible assets $ 17,627,810 $ 16,482,058 $ 9,217,128
Tangible shareholders’ equity to tangible assets 8.4% 8.8% 8.2%
Net income $ 52,014 $ 47,604 $ 25,775 $ 108,032 $ 86,830
Significant items, net of tax 1,474 3,046 1,985 32,373 5,484
Net income, excl. significant items $ 53,488 $ 50,650 $ 27,760 $ 140,405 $ 92,314
Diluted earnings per share $ 0.73 $ 0.67 $ 0.67
Effect of significant items, net of tax 0.02 0.04 0.05
Diluted earnings per share, excl. significant items $ 0.75 $ 0.71 $ 0.72
Average assets $ 18,264,699 $ 17,474,019 $ 9,332,398
Return on average assets 1.14% 1.09% 1.10%
Effect of significant items, net of tax 0.03% 0.07% 0.09%
Return on average assets, excl. significant items 1.17% 1.16% 1.19%
Average shareholders’ equity $ 2,606,517 $ 2,584,501 $ 1,033,014
Return on average shareholders’ equity 8.0% 7.4% 10.0%
Effect of significant items, net of tax 0.2% 0.4% 0.7%
Return on average shareholders’ equity, excl. significant items 8.2% 7.8% 10.7%
(Dollars in thousands, except per share data)
Appendix: Non-GAAP Reconciliation
30
lars in thousands, exce t per share data)
Q2 2017 Q1 2017 Q2 2016
Efficiency Ratio:
Total revenue – GAAP $ 179,516 $ 168,107 $ 98,392
Net interest income FTE adjustment 3,169 3,068 2,138
Significant items 1,725 429 (123)
Total revenue – Non-GAAP $ 184,410 $ 171,604 $ 100,407
Operating expenses – GAAP $ 98,237 $ 104,196 $ 59,085
Transaction expenses (465) (4,167) (3,054)
Operating expenses, excluding transaction expenses 97,772 100,029 56,031
Amortization of intangibles (1,525) (1,513) (1,195)
Operating expenses – Non-GAAP $ 96,247 $ 98,516 $ 54,836
Efficiency ratio – GAAP 54.7% 62.0% 60.1%
Efficiency ratio – adjusted 52.2% 57.4% 54.6%
Net Interest Margin:
Net interest income – GAAP $ 137,948 $ 130,097 $ 77,495
Adjustments for tax equivalent interest:
Loans 814 808 717
Investment securities 2,355 2,260 1,421
Total taxable equivalent adjustments 3,169 3,068 2,138
Net interest income (on a tax equivalent basis) $ 141,117 $ 133,165 $ 79,633
Average interest-earning assets $ 16,228,996 $ 15,395,465 $ 8,636,627
Net interest margin – GAAP 3.41% 3.41% 3.60%
Net interest margin (on a tax-equivalent basis) 3.48% 3.49% 3.70%
(Dollars in thousands, except per share data)
Appendix: Non-GAAP Reconciliation
31
lars in thousands, exce t per share data)
2016 2015 2014 2013 2012
Net income $108,032 $86,830 $62,121 $56,808 $51,008
Significant items, net of tax 32,373 5,484 4,555 0 0
Net income, excluding significant items $140,405 $92,314 $66,676 $56,808 $51,008
Diluted earnings per share $2.17 $2.39 $1.97 $2.00 $1.85
Effect of significant items, net of tax 0.64 0.15 0.14 0.00 0.00
Diluted earnings per share, excluding significant items $2.81 $2.54 $2.11 $2.00 $1.85
Average assets $12,037,155 $8,481,228 $6,473,144 $5,964,592 $5,442,079
Return on average assets 0.90% 1.02% 0.96% 0.95% 0.94%
Effect of significant items, net of tax 0.27% 0.07% 0.07% 0.00% 0.00%
Return on average assets, excluding significant items 1.17% 1.09% 1.03% 0.95% 0.94%
Efficiency Ratio:
Total revenue – GAAP $ 503,431 $ 354,224 $ 275,646 $ 257,056 $242,229
Net interest income FTE adjustment 9,642 7,452 5,975 5,355 5,037
Significant items (13,172) (779) 0 0 0
Total revenue – Non-GAAP $499,901 $360,897 $281,621 $ 262,411 $247,266
Operating expenses – GAAP $338,418 $223,894 $179,925 $ 164,948 $151,921
Transaction expenses (61,134) (7,804) (6,388) 0 0
Amortization of intangibles (5,524) (4,389) (2,029) (1,909) (1,569)
Operating expenses – Non-GAAP $271,760 $211,701 $171,508 $163,039 $150,352
Efficiency ratio – GAAP 67.2% 63.2% 65.3% 64.2% 62.7%
Efficiency ratio – adjusted 54.4% 58.7% 60.9% 62.1% 60.8%
32
Non-GAAP Reconciliation
(Dollars in thousands, except per share data)
33
2016 2015 2014 2013 2012
Average Tangible Common Equity
Average common equity $ 1,546,721 $ 919,328 $ 754,211 $ 626,555 $ 587,451
Average goodwill, CDI and
noncompete agreements, net of tax (514,634) (245,894) (157,634) (127,363) (130,173)
Average tangible common equity $ 1,032,087 $ 673,434 $ 596,577 $ 499,192 $ 457,278
Return on Average Tangible
Shareholders’ Equity
Net income $140,405 $92,314 $66,676 $56,808 $51,008
Average tangible shareholders’ equity $1,032,087 $673,434 $596,577 $499,192 $457,278
Return on average tangible
shareholders’ equity 13.6% 13.7% 11.2% 11.4% 11.2%
Non-GAAP Reconciliation
(Dollars in thousands)
